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Should we 13?

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    Should we 13?

    Ok, first time I've posted a question so please be gentle...

    We are in a tough situation. Minnesota residents.

    I am the sole income for our family, and make enough that my children receive ma but neither my wife nor I do.

    I have some old student loans (3rd party, WF) that have gone to default and now a lawsuit has been filed. $30k plus.

    Without making payments to this loan, we are barely keeping our heads above water. We do have some credit cards but they get paid, and we own a home which we are flat even on (not underwater, but no equity) and two cars totalling in value under 7k. Nothing else is in arrears, just these student loans. It is also important to note that this suit is over two loans, with two more sitting in deferrment until the end of the year as I will graduate then.

    We see a couple options, none are pretty but we're looking at the overall picture and not just what might be easier right now.

    1. Let them get the judgment. We are essentially judgment proof as in MN you can't garnish if you get MA. We also have little in the way of savings so not much to hold there either. This may or may not always be the case, that's the gamble.
    2. Chap 13. This puts things off for 5 years and with our income the payments would be low. However if we can't find a suitable way to improve either income or expenses we will be in the same shape in 5 years.
    3. They have offered a settlement deal, would shave off 10k but there's no way we could make it work and we'd just get defaulted on that in a year too.


    One final thing we need to note is this. At least once a year (sometimes 2x or 3x ) we get one time payments, in some cases into the 3-5k range (tax refunds, student loan overage). These funds help keep us on the level and not losing ground. However, it is my understanding that if the judgment comes down these can be attached regardless of whether they have a judgment or a chapter 13 in place.

    Suggestions?

    #2
    You've asked some intelligent questions and have laid our your situation very well. I do not know what "MA" is? It is important to note that further student loan "overages" are not overages but more loans that are being disbursed to you. I hope that with your degree you will be able to earn more income to pay off these loans. If you are not able to be garnished, it might make sense to either start the settlement deal with the hope that you will get a better paying job with your degree or just wait to see if you are able to secure a better job after graduating.

    You also didn't note whether there was an ongoing balance on the credit cards or if you were actually paying them off every month down to $0.00 balance, this could make a difference in your decision.
    Any information posted by me is for general informational purposes only. While I am an attorney, I am not YOUR attorney and any information I provide is not legal advice.

    Comment


      #3
      Good point. MA = Medical assistance. In MN, if you are receiving MA you are not garnishable.

      There is some balance to these credit cards, but we were able to pay more than the minimum to each every month and work down the balances.

      In short, if it were not for this lawsuit we would still be struggling but I would be able to make payments and continue moving forward.

      Comment


        #4
        IMHO a 13 at this time is not in your best interest. A judge might not even grant you one, as you must offer a feasible plan.
        You need to be able to have some little something on hand for emergency.
        I'd seriously consider doing nothing and dealing with this when you are in a better position. Or just going to court and presenting your case to the judge. Propose some minimum payment plan.
        Just be sure to keep your cash out of the bank.
        Good luck!

        Keep On Smilin'

        Comment

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